Our first major indicator was the cross of the 50/200 Exponential Moving Averages which occurred in January of 2014. The last time these indicators crossed was back in the summer of 2003 following a massive monthly pattern in 2001 at 2.95000. This "Death Cross" contributed to the acceleration of the bear market following the topping pattern.
We are currently witnessing an identical inverse scenario taking place as we transition into a powerful bull market. Taking a closer look we can see a 2 year reversal pattern that formed from April 2011 - April 2013 with 1.4750 acting as the floor. Following the breakout of this impressive reversal pattern, we can take note of the 50/200 "Golden Cross". Remember, the last cross of these EMA's was back in 2003; a solid 10.5 years ago. We have remained in a bull market ever since the most recent "Golden Cross"
The recent price action has been exceptionally ; with this pair currently reflecting a massive . This channel developed following a complex pullback pattern that occurred after the "Golden Cross"; re-testing the 200 as new support.
Coming up to speed with last week, we had a massive form at the key level of 1.9000. This level acted as major resistance at the end of January 2014 which kicked off the Pullback Pattern. We have now re-tested that 1.9000 level as support with a that is indicating a new leg higher in this bull market.
Utilizing our Fibonacci Tool, we are able to measure and identify that each new drive off the bottom trend-line of the channel has occurred at the .618 of the previous up-move. Price then went on to target the 1.618 with 100% accuracy.
Keeping this in mind, the textbook price action of the last weekly pullback that ended with a reversal candle, point to the high-probability of the next wave targeting the 1.618 at 2.07500. What makes this target even more appealing is the fact that the 50% of the last leg down (measuring from the previous swing high at 2.7000 to the lows) lies exactly at the 1.618 weekly extension at 2.07500. If this target is reached, broken, and re-tested as new support, this opens up the .618 @ 2.22500 as Target 3.
Last week's provides us with the proper technical signal to enter a long position on GBP/AUD with 3 logical upside targets. Target 1 being the previous key resistance at 2.000 which triggered the most recent pullback. Target 2 is our 1.618 weekly as outlined above. Target 3 is the .618 of the previous leg.
First i want to thank you and Tom for all the effort and time you put into making us better traders, i know we all appreciate it a whole lot!
This is an amazing analysis as usual, which lines up perfectly with my own views, although i didn't catch an opportunity to enter yet.
One remark though. In the sentence: 'Remember, the last cross of these EMA's was back in 2003; a solid 10.5 years ago. We have remained in a bull market ever since. '
I think you meant to say that it has been a 'bear' market, like you mentioned before and not a 'bull' market.
Anyway, looking forward to the weeks ahead, as i'm sure this will be very interesting times for the markets!
Through this A++ weekly setup, I realized:
- A breakout and retest on daily (that I'm waiting for in this setup) = a lower timeframe retrace, which ≈ the retraces I look for in intradays when I see an A++ daily.
- And then when (if) I get the daily retrace that I'm looking for in this setup, I'll be looking for an intraday retrace!
- It's like a fractal, a box in a box in a box, a Russian nesting doll, or looking at a mirror in another mirror!!
- THIS MIGHT BE WHY FIBONACCI WORKS!
The combination of this weekly setup, the discussions we've had over this setup in the community, Active Trader, and day trading has given yet another huge breakthrough! I think I understand how to place entries using multiple timeframe analysis now!
THANK YOU PAUL!
BTW, Paul (or Tom), in the event of the price action just running away without retesting 1.90000 - 1.91000, do you just plan on missing this setup?
So keep up the good work bro, this is huge! Thank you for all the effort you put into our education!